American automakers are increasingly seeing how much the move to replace Chinese technology in electric vehicles will cost them. According to one former Detroit executive, when companies compared the cost of autonomous driving systems with Chinese technology, including lidar and alternative solutions without Chinese components, the result was shocking. As he said, when he saw the price increase, he was speechless
In January of last year, the US Department of Commerce, with the rationale of protecting national security, published rules that prohibit the sale or import of certain software and hardware for the corresponding cars from China and Russia. The software ban starts in 2027 models, while the hardware ban applies from 2030 models.
The rules were introduced during the Joe Biden administration, but the new administration of Donald Trump has kept them. Already in June of this year, Polestar, a brand controlled by the Chinese Geely, was banned from the American market.
Although the deadlines seem far away, the automotive industry plans models years in advance, so manufacturers must already choose suppliers that meet the new rules. That push has opened up space for American companies trying to replace China’s dominance in vehicle communication modules.
Chinese technology in cars is difficult to replace because American suppliers charge too high a price
One example is Eagle Wireless, a manufacturer of automotive electronics founded at the end of 2025. The company admits that its modules are currently 5% to 15% more expensive than the competition. It is additionally interesting that Eagle was initially created based on the licensed module design of the Chinese company Quectel, so now it has until 2030 to develop its own replacement version.
The pressure on the supply chain is increasing. Hilary Kane of the Alliance for Automotive Innovation, which represents most of the major car manufacturers, says that the new rules require an in-depth review of the entire supply chain, while the deadline for compliance is very short.
That is why some companies are already asking for exemptions. Ford has requested permission to continue importing certain Chinese-made models, while Volvo, also controlled by Geely, is among the first manufacturers to receive approval.
According to Counterpoint Research, Chinese manufacturers account for nearly half of global shipments of automotive mobile IoT modules. This shows why replacement is so complicated and expensive. Eagle is now rapidly developing its own products, and the company’s technical director says it has to hire a large number of engineers.
Licensing Chinese technology is not new to the American auto industry. Ford, for example, uses a license for the technology of China’s CATL in American battery production. Ilaria Macoko from the Center for Strategic and International Studies warns that such cooperation can further increase dependence on China, but that in an increasingly competitive industrial environment, they are sometimes the only realistic way to get the necessary expertise.
As Washington tightens rules on Chinese technology in cars, American manufacturing is already deeply dependent on Chinese parts. According to consultancy AlixPartners, there are more than 60 auto suppliers in the US controlled by Chinese companies, in areas such as airbags, automotive glass and steering systems.
At least 40 models sold in the US use Chinese components, while Chinese companies account for about 5% of the approximately 10,000 US auto suppliers. Jürgen Simon from AlixPartners says that Chinese suppliers were once avoided due to inferior quality and performance, but that today “every time you lose a job, the opponent is a Chinese supplier”, writes mydrivers.